Paying it Forward: Why Investing in Legal Aid Makes Economic Sense

justiceThe pro bono community understands that providing assistance to those in need of civil legal aid is a profound public-private partnership. Access to justice is a core value, but is it fiscally prudent? In other words, what is the economic impact of funding legal services?

Diverse jurisdictions (i.e., Arkansas, Florida, Georgia, Illinois, Iowa, Louisiana, Massachusetts, Missouri, New York, North Carolina, Oklahoma, Texas, and Virginia) have commissioned studies to measure just this statistic, and they have yielded some remarkable results. According to a recent study entitled “Economic Impact of Civil Legal Aid Organizations in Tennessee,” a one-dollar investment in legal services returns $11.21 in economic benefit for the state. Tennessee isn’t alone in its remarkable return on investment; a similar study conducted by the Pennsylvania IOLTA Board concluded that their investment in legal services has an eleven fold return in economic benefit for the state.

While the methodologies of these studies have differed slightly, most analyses have focused on common measures, such as the value of federal benefits obtained for legal aid clients. The studies also examined secondary and less tangible gains associated with funding legal services, such as the economic multiplier effect, which measures the increased economic activity resulting from economic inflows into a state. Increased federal benefits and wages give recipients greater spending and purchasing power, thus stimulating general economic activity and promoting growth.

Finally, studies documented the state savings associated with funding legal services for low-income citizens. They primarily focused on two categories: savings associated with curtailing foreclosure and eviction proceedings and savings associated with preventing domestic violence or abuse. By estimating the potential costs associated with a housing or domestic violence incident, such as the cost of emergency shelter and medical care, and by documenting that the state would avoid certain costs with proper legal intervention, the studies were able to measure the significant savings states achieve as a result of legal services funding. And just as studies looked at the secondary benefits of the economic multiplier effect, so too did they look to the positive secondary gains associated with reduced foreclosures and evictions. For example, decreasing the number of foreclosures prevented surrounding houses and neighborhoods from becoming devalued, protecting the valuable equity of these neighboring homeowners.

These studies and data sets remind us that increasing funding for civil legal aid is not only the right thing to do in order to assure equal access to justice for all, but a smart investment at all levels of government.

Hat tip to PBI intern Nate Hyman for his help with this post.